The only agency in the federal government required by law to include small businesses specifically in its R&D funding wishes it didn't have to.

To the NSF leadership, which comes from and often returns to the university research community, giving money to small, profit-seeking businesses was no way to enhance their academic prestige. Accordingly, by all accounts, it was with little enthusiasm that the science agency created its Small Business Innovation Research program under orders from Congress in 1976. The lawmakers told the NSF to spend at least 12.5% of its applied research budget each year on the small business program, and so far it has. But it has kept the small business program small by holding down increases in its total applied research budget. "It certainly didn't increase as fast as the basic research budget," acknowledges NSF assistant director Dr. Harvey Averch.

This year, Ronald Reagan gave the NSF just the excuse its been looking for. The Reagan Administration cut President Carter's NSF budget for 1981 by 7.3%. The NSF in turn chopped the small-business applied research budget by 33.3%. Reagan cut the agency's 1982 budget by 12.9%. The agency cut its small business budget for 1982 by 65.5%.

"It's a matter of relative priorities," explains Averch, "and some things have to give. I don't think one can make the case that it was specific discrimination against the Small Business Innovation Research program."

Congress later restored $20 million to the NSF's '81 budget. A subcommittee of the Senate Appropriations Committee, acting on an amendment from Sen. Lowell Weicker (R-Conn.), earmarked $2.5 million for the small business program, enough to restore its funding to the original level proposed by Carter. In a House-Senate conference committee, however, Rep. Edward Boland (D-Mass.) refused to earmark those funds. Consequently the entire $20 million is to be allocated by the NSF in accordance with its own priorities. Will any of that money find its way back to small business research?

Dr. John Slaughter, the NSF's director, should by now have received a letter signed by several members of the Senate Appropriations Committee urging him to restore "sufficient funds to allow the program to continue effectively." Slaughter was not available to tell us whether he would take the senators' advice.